Geopolitical Tensions Outside China Resurface, Lead Prices Expected to Give Back Some Gains [SMM Lead Morning Meeting Minutes]

Futures:

Overnight, LME lead opened at $1,977/mt. Throughout the day, LME lead continued the previous day's upward fluctuation, coupled with lead ingot destocking outside China. During the European session, LME lead reached a high of $1,990/mt, again hitting a new high since late February this year. However, Middle East events resurfaced overnight, causing non-ferrous metals to generally pull back. LME lead reversed and gave back some gains, ultimately closing at $1,977.5/mt, up 0.23%.

Overnight, the most-traded SHFE lead 2606 contract opened at 16,825 yuan/mt. Domestic supply-side production cuts and the consumption off-season constrained each other, with bulls and bears locked in a stalemate during the session. SHFE lead fluctuated between 16,775-16,800 yuan/mt for an extended period, ultimately closing at 16,785 yuan/mt, down 0.36%. Open interest stood at 65,576 lots, a decrease of 300 lots from the previous trading day.

On the macro front:

Tensions in the Strait of Hormuz escalated again: Iran claimed the US violated the ceasefire by conducting airstrikes on Iranian coastal areas and tankers and had retaliated, while the US military claimed it intercepted unprovoked attacks launched by Iran and conducted targeted strikes on Iranian military facilities. A US trade court ruled Trump's 10% global tariffs invalid. US initial jobless claims rebounded to 200,000 last week but came in below expectations, while continuing claims hit a new low since January 2024. Additionally, PBOC increased gold holdings for 18 consecutive months, with the pace of accumulation further accelerating in April.

:

In the lead spot market yesterday, following the previous day's SHFE lead rally, SHFE lead pulled back relatively. Suppliers sold along with the market. Quotations in Jiangsu, Zhejiang, Shanghai maintained slight premiums. During the period, some individual suppliers had sold out the previous day and suspended quotations today. Primary lead smelter cargoes self-picked up from production site saw more quotations, with fewer discount quotations. Mainstream production areas quoted at premiums of 0-50 yuan/mt against SMM #1 lead average price, ex-works, while a few regions quoted at premiums above 100 yuan/mt. Secondary lead side, as lead prices pulled back, smelters' willingness to sell weakened, with some adopting a wait-and-see approach and suspending quotations. Secondary refined lead was quoted at discounts of 75 yuan/mt to premiums of 50 yuan/mt against SMM #1 lead average price, ex-works. Downstream enterprises maintained purchasing as needed with low inquiry enthusiasm, mainly taking delivery through long-term contracts, while spot order market trading turned quiet.

Inventory: As of May 7, LME lead inventory stood at 266,175 mt, down 225 mt from the previous trading day. SHFE lead ingot warrant inventory totaled 55,529 mt, unchanged from the previous trading day. SMM lead ingot social inventory showed an upward trend compared to pre-holiday levels.

Today's Lead Price Forecast:

Geopolitical events outside China resurfaced, macro conditions tightened, and non-ferrous metals mostly pulled back. China's lead fundamentals performed poorly. Although secondary lead smelters underwent widespread production cuts and shutdowns, the lead-acid battery market was in its traditional off-season. Against the backdrop of declines in both supply and demand, lead ingot inventory buildup persisted, making it difficult to support lead price increases. In the short term, bullish and bearish factors were intertwined, and lead prices were expected to retrace part of their earlier gains.

Data Source Disclaimer: Data other than publicly available information is derived from public information, market communication, and SMM's internal database models, processed by SMM for reference only and does not constitute decision-making advice.